Proportionate income differentials: A long walk to social justice

Mandela Initiative newsletter (Issue 4, December 2017)


The income gap between the top and the bottom income earners in South Africa can be traced back to the decades of apartheid and colonial oppression. To overcome inherited pay inequalities is therefore an objective of equality law. In addition, new forms of labour associated with the fourth industrial revolution also require legal solutions.

The law to address disproportionate income differentials at the "classical" workplace is the Employment Equity Act (EEA), and in particular section 27. The Mandela Initiative action dialogue looked at how that section of the Act can be put into practice while discussions on the second day focused on new forms of labour where very low income is rife too, and the related challenges and experiences from international and local regulatory and organisational perspectives.

The dialogue was organised in partnership with the Labour and Enterprise Policy Research Group and the Institute of Development and Labour Law (University of Cape Town), and the Social Law Project (University of the Western Cape). An entry point was that unskilled and low-skilled workers worldwide find themselves at the bottom of the pay scale. In South Africa the size of the gap between top and bottom is noticeably higher than in other economies, and income in new forms of labour is also very low.

Section 27 of the Employment Equity Act can be used to address the pay gap between the highest and lowest incomes in the"classical" workplace .

To overcome the outcome of discriminatory practices of South Africa’s past, the Labour Market Commission stated, in 1996, "South Africa [has to] adopt the long-term goal of reducing earnings differentials substantially, not simply deracialising them."For this purpose, section 27 was introduced but, while its implementation is constitutionally demanded, it is long overdue.

Some of the recommendations that emerged out of the dialogue included:

  • A Code of Good Practice on section 27: Develop a code on the design of norms and benchmarks for proportionate income differentials at workplaces, including practical examples.
  • The EEA 4 form: Redesign this form, which companies must complete annually by indicating the occupational income differentials to government, to capture information better so that the form serves its purpose as indicated by section 27.
  • The enforcement of the legislation: To identify ways to avoid the bypassing of section 27 by labour brokers or other legal forms of labour providers.
  • Relevant international and local legal frameworks: Develop effective tools to compare different labour forms and develop additional necessary norms and benchmarks for proportionate income differentials by using national and international norms and experience.
  • Examples on norms and benchmarks for income differentials: Develop a 5%-top / 5%-bottom ratio to effect proportionate income differentials. This can set a framework within which a pay structure for proportionate increases is possible.
  • The disclosure of data: Disclose the data captured on EEA 4 forms to the relevant negotiation parties. A detailed motivation on the obligation of the Department of Labour to disclose this data, and how to present the information deduced from the data, was needed.

The challenges of implementing section 27 cannot be denied. A pilot project by South African and international role-players is one way to assist the development of norms and benchmarks. One benefit of such a collaboration would be to learn from experiences in countries without an inherited pay gap. Partners for such a project could be the ILO, employer organisations, academic institutes, government officials and trade unions. Also, to place a pilot project where cooperation already exists will enhance its performance. In this regard, the National Union of Metalworkers of South Africa and its German counterpart, IG Metall, gave workshop participants insight into their joint research on the value chain.

The dialogue was supported by the Hans Böckler Foundation and the Programme to Support Pro-poor Policy Development, a joint programme between the European Union and the Department of Planning, Monitoring and Evaluation. Their sponsorship enabled the involvement of important international and national experts, such as Prof Wilma B. Liebman from Rutgers University, United States, a leading labour law expert on new forms of labour who was appointed by President Barak Obama to head the US National Labor Relations Board (NLLRB).

Read a summary of Prof Liebman’s presentation on new forms of labour

Implementing section 27 will be challenging. A pilot project by South African and international role-players could assist the development of norms and benchmarks for income differentials in the country.

Read the dialogue report

View a selection of the dialogue presentations

This article was written by, Dr Ruediger Helm, from UCT’s Institute of Development and Labour Law, and edited by Charmaine Smith, communication manager of the Mandela Initiative.


1Report of the Presidential Commission to Investigate Labour Market Policy (Labour Market Commission): Restructuring the South African Labour Market, June 1996